Selling Mineral Rights means Cash Up Front

The discovery of new shale gas regions at various locations in the U.S. plus the advancement in drilling technologies have led the U.S. Energy Information Administration (EIA) to confidently state that the decline in the volume of natural gas produced from existing shale regions can, and will be, offset by new ones. Even the International Energy Agency (IEA) was candid enough to say that the increase in natural gas production may end US’ reliance on foreign oil over the next twenty years.

Shale gas pertains to natural gas trapped within fine-grained sedimentary rocks or shale formations. These sedimentary rocks are abundant sources of natural gas and petroleum. According to the EIA, the top six regions in the US that produce all of the nation’s domestic natural gas needs, as well as about 90% more growth in oil production are the:

Eagle Ford shale in Southern Texas;

Bakken shale region, which extends from North Dakota and Montana;

Niobrara, which stretches across parts Nebraska, Wyoming, Colorado and South Dakota;

Haynesville in Texas, Louisiana and Arkansas;

Permian in Western Texas; and,

Marcellus, one of the most extensive shale regions in the US and probably the second largest in the world. This shale area across Maryland, Ohio, West Virginia, Pennsylvania and New York.

Private individuals, whose properties will most likely be affected by the still widening drilling activities in the top six regions, are all frequently confronted by the same question: Will they be selling their property, selling mineral rights or will they just be leasing these?

Offers from companies willing to buy mineral rights can reach millions of dollars. When an offer is made, this means cash up front. A property owner may, however, choose to sell only his or her mineral rights and not the whole property (this is allowed in states where separate ownership of real estate and mineral rights is recognized).